JUDGE LeBLANC TO REPLACE JIMMY KIMMEL AS NL's MEDIA SENSATION

As the fun was winding down in Dildo, Jimmy Kimmel having accepted the title of Honorary Mayor rather than face an Election, Judge Richard LeBlanc was wrapping up the Inquiry into the Muskrat Falls Project. It was time to begin the contemplation of a problem far harder than that which had excited Kimmel’s viewers all week.

Likely, Kimmel had stolen even the “die-hards” who might have otherwise tuned in for the Inquiry’s last inning. There was no pleasure to be had in Goose Bay anyway. There was only the pained legal verbiage of banal lawyers representing Nalcor and the venal politicians — the “culprits” — as well as the “contractors” (Astaldi), the “silent”  (Newfoundland Power), and the senior bureaucrats, the “submissives”, whose practiced deference helped create the debacle.

Judge LeBlanc will have the last word; unlike Kimmel, cautious metaphor will be the least of his problems. 

THE NORTH SPUR: WARNINGS IGNORED

Guest Post by David Vardy
Many warnings about the North Spur have been ignored.

Dr. Lennart Elfgren and Dr. Stig Bernander, both full professors at the Lulea University of Technology in Sweden, wrote the Minister of Natural Resources on August 1, 2019.  In their technical report entitled A Downward Progressive Failure of the North Spur at Muskrat Falls - A Possibility that ought to be investigated and mitigated, dated July 25, 2019, submitted to the Minister, they said that “The most critical inclined progressive downward failure surfaces of the North Spur at Muskrat Falls have not been properly investigated. Relevant stress/strain properties of the metastable soil layers have not been made available, and no independent external experts seem to have reviewed this aspect of the stabilization work.”

They said that old methodology was used to assess the safety of the North Spur, the same model which had been used unsuccessfully at other failure sites, such as Mount Polley, a copper/gold tailings pond owned by Imperial Metals and located in central British Columbia. They repeated their call for an independent panel of experts to undertake the research and to assess the need for further remedial work.

NORTH SPUR: JIM GORDON TRIES AGAIN TO GET SIOBHAN COADY'S ATTENTION

Dr. Stig Bernander

Editor's Note: Canadian Hydro Engineer, Jim Gordon has worked hard to get successive Ministers of Natural Resources, including more recently Siobhan Coady, to take seriously the geotechnical analysis conducted by Swedish scientists Dr. Stig Bernander and Dr. Lennart Elfgren in relation to the North Spur, but without success. 

The Spur is a natural formation which forms part of the dam structure for the Muskrat Falls project. The feature contains clays defined by experts as "sensitive" because under certain circumstances they have the capacity to liquefy and to collapse. The issue is increasingly urgent because Nalcor, in a matter of days, will begin filling the Muskrat reservoir to the 39 meter level. 

MOODY'S AND FINANCE: WAITING FOR A MIRACLE

First, let’s clear up any confusion. The downgrade in the Province’s credit rating by Moody’s, a credit rating agency, resulted not from a “highly ambitious” deficit plan, as the Agency suggested, but because the Finance Minister’s ambitions about Budget balance in 2022-23 were supported only by talk. Moody's as much as said, “talk is cheap.”

Underlying the issue is a $14.5 billion “Direct” Debt compounded by $9.4 billion of utility debt referred to by the Budget Estimates as “self-financing” — which, of course, it isn't. “Rate mitigation” — required to prevent power costs reaching 23 cents/kWh — means that the Province's $4 billion equity contribution to the project is “sunk cost”. Implicitly, that’s Moody's view, too.

MEASURING AND MANAGING THE FISCAL IMPACT OF MUSKRAT FALLS

Guest Post by David Vardy
Measuring and Managing the Fiscal Impact of Muskrat Falls

Is it possible for us to manage the fiscal burden of Muskrat Falls? Moody’s downgrading of our credit rating raises serious questions as to whether we can handle this massive burden. It was Premier Dwight Ball, speaking at the St. John’s Rotary Club, who said “you cannot manage what you cannot measure”.  This is a variation on a quote from W. Edwards Deming, the father of modern quality management theory.  Can we really find a remedy to the problem if we cannot diagnose it and measure it? Surely the burden can be measured.

The PUB is relying on Nalcor’s revenue requirements in 2021 as a measure of the burden to be carried. We know that this does not take into account the 8.4% rate of return on equity on the generating assets in Labrador, an equity burden already being carried on the books of the province but deferred for future recovery from ratepayers.

"ANONYMOUS ENGINEER" REFLECTS ON INQUIRY

Guest Post by the "Anonymous Engineer"
EDITOR'S NOTE: The author of today's article is the whistleblower, dubbed the "Anonymous Engineer", who disclosed – on this Blog - falsification of the estimates for the Muskrat Falls project. That was January 30, 2017 . His comments were recorded in a post entitled Muskrat Cost Estimates "A Complete Falsification". A second post called Muskrat: Allegations of Phony Cost Estimates provided significant additional details of low-balling which ultimately were used to justify the Sanction of a project. His assertions have been confirmed by Forensic Auditor, Grant Thornton and by various Witnesses who gave testimony at the Commission of Inquiry. — Des Sullivan

Nalcor - A Documented History of Deceit
Now that the Inquiry is reaching a conclusion – after almost 130 days of hearings and at least 125 witnesses of all stripes – left exposed is an unmistakable narrative, a trail of deceit and misinformation that is beyond belief. 

Let’s look at this trail from the very beginning: 

MUSKRAT: DOES DANNY BLAME THE PUBLIC, TOO?

It sure seemed that the words of Joseph de Maistre, the 18th century French Monarchist, moralist and philosopher, were being invoked once again — this time by Nalcor CEO Stan Marshall at the Muskrat Falls Inquiry. “Every nation gets the government it deserves,” asserted de Maistre, an advocate of social hierarchy (a system based on class division) in the period immediately following the French Revolution.

The Consumer Advocate’s legal Counsel, Chris Peddigrew, was questioning Marshall's assertion a day earlier when he opined that the vast majority of people in the province had supported the Muskrat Falls project and that, accordingly, we are all to blame for what has occurred.

LeBLANC’S ADVICE TO BALL AND SIX OTHER TAKEAWAYS

 The completion of testimony by Premier Dwight Ball on Friday, June 5th brought Phase II of the Muskrat Falls Inquiry to a close. His comments can easily be described as anti-climactic given the larger narrative that the Commissioner, Judge Richard LeBlanc, has heard. Yes, it was important to hear the Premier’s version of the events that led to Ed Martin’s departure as Nalcor CEO, and about the mess he faced having taken Office. But the Commissioner’s advice to the Premier at the end had far more relevance than anything Ball shared.

 It wasn’t as if the Premier had had the intestinal fortitude to let Mr. Martin grovel in front of a Judge pleading for his severance package. Or even that his lack of forthrightness leaves us doubtful how both “ratepayers” and “taxpayers” will escape Muskrat’s underestimated and misunderstood financial burden.

STAN MARSHALL’S MUSKRAT BARGAIN: CAVEAT EMPTOR!

Nalcor CEO Stan Marshall gave testimony this week at the Muskrat Falls Inquiry.  During his examination he referred to the need to see the “big picture” as to the economics of Muskrat Falls. He said that this can best be done by explaining the cost of Muskrat Falls in cents per Kilowatt Hour, which makes it easier to understand than by using large numbers in the millions and billions.

His theme was that the project is not really all bad, the costs not unreasonable. When you look closely a different picture emerges from the one Stan has presented. The “big picture” is not nearly as rosy. Was his presentation an attempt to explain away the “boondoggle” or to rationalize it? 

BRENDAN PADDICK: NALCOR'S CHAIR OR CHEERLEADER?

Listening to Brendan Paddick, cable guru and Nalcor Board Chair, testifying at the Muskrat Falls Inquiry two weeks ago, constituted one of those “pinch me” moments when people esteemed for their successes, broad range of business and life experience, simply disappoint. 

That is not to dismiss or diminish Mr. Paddick’s accomplishments. Indeed, he may well be an inspiration to entrepreneurs seeking to discover the dimensions of their business acumen. And, it is right to acknowledge his and the Board Member's pro bono service which, while poor public policy, especially on heavily demanding Boards, still carries the obligation of their best work.